Salient to Investors:
Nicholas Pardini at Nomadic Capital Partners writes:
- US and European stocks are no longer the safest bets. Investors should expect subpar real returns from the US economy and positive long run returns from emerging markets.
- The biggest economic trend of the 21st century is the global convergence of living standards, with a growing global emerging market middle class. Currency debasement, mismanaged government fiscal issues, increased corruption, high consumer debt, cultural malaise has caused a decline in wealth in Western nations.
- Emerging East Asia consumers have more money to buy basic luxuries so expect high growth for decades to come – cf the US between 1865-1929.
- Commodity exporters such as Canada, Australia, New Zealand and Chile will benefit from the demand on raw materials coming from resource poor countries such as China and India.
- With large reserves of natural resources such as copper and oil, emerging Latin American nations have a strong possibility of performing on par with their Asian competitors.
- Western consumers, choked by high debt, have lost their discretionary incomes, aggravated by the Fed’s continuous debasement of the US dollar. Real wages will continue to fall.
- Growth in emerging markets is sustainable because it is based on savings and capital investment, but growth in the West is untenable due to its basis on debt and government spending.
Read the full article at http://seekingalpha.com/article/1120241-the-great-convergence-and-what-it-means-to-investors?source=email_macro_view&ifp=0.